Finland is one of the most rural countries within the OECD and it is also one of the early adopters of a multi-sectoral approach to rural policy. As such, the origins and evolution of Finnish rural policy are of great interest to both OECD countries and non-OECD countries alike, many of whom are still in the early stages of development. A first rural policy review was conducted for Finland in 1995, and this edition offers a unique look at how Finnish rural policy has evolved since the initial recommendations made in 1995.

The Finnish model of rural policy has been reasonably successful in achieving coherence among sectoral policies oriented to rural areas (the so-called broad rural policy) and in tailoring specific programmes to promote rural development (the so-called narrow rural policy). The Rural Policy Committee has played a crucial role in the governance of rural policy, bringing together diverse actors and advocating for rural communities. Key priorities for the future are delivering public services to an ageing and dispersed population more equitably and efficienctly, enhancing the competitiveness of an increasing number of non-farm related rural firms, and improving the business environment in rural areas by fully utilising their abundant natural amenities.

This report will be of interest to policy makers, researchers, NGOs and others active in rural development.

French, Finnish and Swedish translations of the Assessment and Recommendations have been included in this volume.

Finland is one of the most “rural” countries within the OECD. According to the OECD definition of rural areas, Finland ranks fifth in terms of the share of territory covered by predominantly rural (PR) regions (89%) and ranks second both in terms of population that they host (53%) and in GDP produced within these regions (45%).This chapter provides a detailed profile of Finland’s rural areas analyses its main trends and discusses on its challenges and opportunities. Some of the main points are:

The rural territory in Finland is heterogeneous along two dimensions: northern and eastern regions have a greater dispersion and a higher proportion of population living in rural municipalities than southern and western regions; and along the peri-urban to remote continuum (as the Finnish Rural Typology identifies) there is a clearly differentiated situation in rural municipalities close to urban areas (RCUAs), rural heartland municipalities (RHMs) and sparsely populated rural municipalities (SPRMs).

The rural population underwent important changes in its settlement patterns since the 1990s. On the one hand, migration towards RCUAs is turning them into the areas with the fastest population growth in the country and the youngest age structure. On the other, SPRMs and RHMs are facing depopulation although net out-migration rates, are turning less pronounced in both areas and approach zero in RHMs. Although Finland’s welfare system has been able to provide high quality education and health services even in remote rural areas, there are marked differences in several socioeconomic indicators between the types of municipalities. A notable finding that according to the OECD PISA Evaluation, student performance in Finland’s rural areas is almost as high as in urban regions and higher than the level of rural and urban areas in most OECD countries (See figure 1.8 below).

The rural economy has performed well by international comparison (all PR regions in Finland have GDP per capita above the OECD average and higher than average growth from 1998 to 2003) with a number of regions catching up (See figure 1.12 below). High productivity, employment rates and participation rates are the factors contributing the most to growth in the highest growing rural regions. Although in general the most competitive sub-regions in the country are urban, certain rural areas rank among the top quartile.

The future of rural areas points to a number of important policy issues that deserve consideration: 1) the impact of outmigration in the age-, skill- and gender-structure of remote rural areas 2) availability of public and private services as precondition for sustainability 3) the integration of rural areas with the knowledge-base urban economy; and 4) the impact of climate change in a country with such extreme climate conditions.

This chapter aims to understand where does rural policy stand today in Finland and how it has evolved since 1995 when it had to integrate EU regional and rural development policies into its existing policy framework. Some of the main points are:

At present, Finland defines rural policy in a way that balances well the co-ordination between sectoral policies in order to guarantee:

1) adequate attention to rural areas; and

2) the importance of orienting specific programmes to promote rural development and competitiveness. Finland has achieved this by defining the scope of rural policy along two dimensions: the “broad rural policy” aimed at the first objective and the “narrow rural policy” aimed at the second. This approach is also a good balance between two extremes often found in OECD countries: the “grand plan” solution aiming to integrate all policies into a territorial strategy, which has proved unachievable, and the “niche policy” solution which is very limited in its scope and budget.

The analysis of the Finnish case evidences the need to look not only at the place that rural policy occupies within the Government but also at the legitimacy that rural policy has “earned” among the different actors involved in rural affairs including politicians, government officials at all levels, academia, as well as among the rural population and its organised civil society. The place that rural policy has earned in Finland is largely due to the Rural Policy Committee (RPC), installed as Rural Development Project since 1988, but not recognised by law until 2000. Notwithstanding, the place of rural policy occupies within the Government is still a second best solution. Originally framed within regional policy, highlighting its cross-sectoral dimension, it is currently framed under the Ministry of Agriculture and Forestry influenced by EU rural policy, facing as other countries in that situation, a tension of competing priorities and constituenci es between agricultural and rural policy.

The Rural Policy Programme has been reasonably successful in achieving coherence between the sectoral policies oriented to rural areas. Key strengths of the process are the involvement of civil society and academia in the preparation, negotiation and implementation as well as the clarity in allocation of responsibilities within the Government and the biannual monitoring and evaluation process. Finland has wisely taken advantage of EU funding to build its narrow rural policy. The experience has been particularly successful with regards to adoption of the LEADER approach, which has been regarded as a model for other countries. Among the factors that explain this success are 1) the pre-existing network of voluntary village action, 2) the “mainstreaming” of LEADER with national and other EU Funds (ERDF, EAGGF-O and EAGGF-G), 3) the participatory, tripartite structure of the Local Action Groups (LAGs) board and the relative autonomy of the LAGs.

Chapter 3. Focus on Public Service Delivery

Finland faces important challenges in public service delivery, particularly in remote rural areas. These challenges are linked to the capacity of rural municipalities to fund and deliver public services in the context of a decreasing and ageing population, the double role of municipalities as providers of services and jobs (particularly for women which represent up to 75-77% of public service employment in rural areas), and the difficulties of accessibility to public services for population in remote and dispersed localities. This chapter seeks to answer the question of how successful rural policy has been (in its broad and narrow sense) in promoting innovative, efficient and cost-effective means for service delivery in rural areas, while ensuring “minimum rights” for its population. Finland has responded to these challenges in several innovative ways: Through policies oriented to restructure the service delivery mechanisms and foster co-operation between local authorities, through innovative ways of service delivery such as multi-functional and multi-purpose points of delivery, mobile services and telematic and electronic services; and involving the private and the third sectors in the delivery of public services. Areas for improvement are:

Identifying regions’ specific deficits in infrastructure and advances in completion of the deficit through a systematic strategy.

Increase the adaptability of policies to demographic circumstances.

Enhance synergies between EU funded local action groups’ actions and municipal policies in service delivery.

Increase the participation of private and third sectors as allies of the public sector in the delivery of services with an emphasis put on the monitoring of their “public responsibilities.”

Increase the sharing of good practices and innovation between municipalities and among service providers.

Chapter 4. Focus Competitiveness and Business Environment Policies

This fourth chapter seeks to answer the question of how successful has rural policy been (in both its broad and narrow senses) to promote competitiveness of firms and to improve the business environment in rural areas. Finland has a wide array of instruments oriented to promoting firm competitiveness, including EU co-funded financial and business support instruments for micro-enterprises included managed by the Ministry of Agriculture and Forestry and by the Ministry of Trade and Industry (today Ministry of Employment and the Economy), internationally recognized innovation system and a number of cluster policies and regional development policies. All this policy instruments could be strengthened in their rural dimension. Specific areas for improvement are: